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After Coupang announced its listing, the stock prices of Naver and E-Mart are skyrocketing. On the 15th and 16th, Naver’s share price rose 7.50%, and E-Mart’s share price rose 8.93%. This is the result of reflecting the values of Naver Shopping and SSG.COM in the stock price. Ziersoft, the major shareholder of Oasis, a delivery company in the early morning, recorded an upper limit on the 16th. ‘Coupang effect’ is an analysis. As analysis that Coupang was undervalued compared to its valued value came out, investors flocked. The value of Coupang and these companies can be seen by comparing them with listed competitors. We looked at the corporate value of Coupang and its competitors as seen by the securities industry.
PSR for growth stock measurement
The share price-to-sales ratio (PSR) is a representative indicator used by the securities industry. PSR is a figure obtained by dividing the stock price by sales per share. It is suitable for evaluating growth stocks that are producing losses but are rapidly expanding sales. The lower the PSR, the more undervalued.
Mirae Asset Daewoo calculated the PSR based on the estimated market cap of Coupang (30 billion to 50 billion dollars). As a result of comparing this year’s expected sales of 19 trillion won and the top of the market capitalization of 50 billion dollars, the PSR was 2.9 times. Amazon, which has a similar sales structure (80% cost of sales) to Coupang, recorded 3.3 times and Jingdong.com of China 1.1 times.
Based on this, Mirae Asset Daewoo determined that the valuation based on the market cap of $500 was appropriate. It also took into account that there is a possibility that the domestic e-commerce market share, which is in the 13% range, will increase. Compared to the average PSR of small and medium-sized e-commerce, 7-20 times, the value is not excessive. Researcher Jeong Yong-je, Mirae Asset Daewoo said, “When Amazon grew in the red, it received about 2 to 3 times the PSR.”
NH Investment & Securities also analyzed that it is not unreasonable even if Coupang is evaluated at $50 billion. Coupang’s PSR, measured by NH Investment & Securities, is 1.8~3.1x, which is lower than eBay (3.6x) and Alibaba (6.6x). NH Investment & Securities explained, “Coupang valuation is slightly lower than the average of e-commerce companies.”
“Transaction rather than sales”
Eugene Investment & Securities expressed the opinion that it is more appropriate to compare the stock price against the transaction amount rather than the PSR. Eugene Investment & Securities analyzes that domestic competitors are undervalued when measuring Coupang’s valuation based on this standard.
As a result of dividing the estimated market capitalization of 30 to 50 billion dollars by last year’s estimated transaction amount of 24 trillion won, the figure was 1.4 to 2.3 times. This is because if the lower valuation of 1.4x is applied to rival SSG.COM, the enterprise value of SSG.COM is estimated at 6 trillion won. This exceeds the market capitalization of E-Mart (50.1% stake), which is the largest shareholder of SSG.COM, of 5,276.8 billion won.
Young-hoon Joo, a researcher at Eugene Investment & Securities, said, “Coupang’s valuation is considerably higher than the corporate value invested by competitors in the past.” Even considering that Coupang is the number one e-commerce company in Korea, it is not low level.
Naver E-Mart re-evaluation expected
There is also an analysis that the stock prices of domestic e-commerce companies are being re-evaluated following the listing of Coupang. Assuming the valuation of Coupang, the valuation of domestic e-commerce companies such as Naver and E-Mart is low.
As of last year, Naver Shopping recorded 17% of e-commerce market share. It is ahead of Coupang, which is 13%. Nevertheless, the total market capitalization of Naver including shopping is KRW 64.719.8 billion (as of the 16th). This is why there is an evaluation that is low compared to the estimated market capitalization of Coupang of 33 to 55 trillion won. Kim Hyun-yong, a researcher at Hyundai Motor Securities, said, “Even if we assume a discount compared to Coupang, the corporate value of Naver Shopping is 6 to 18 trillion won.”
It is analyzed that the value of Oasis Market, a fresh food delivery company that Zaire Soft owns 79.4% of, is also being revalued. However, it is an analysis that small e-commerce companies are unlikely to receive corporate value as much as Coupang. Eugene Investment & Securities said, “As 11st and T-Mon have a widening competitive edge with top companies, they should show a sales growth rate or profitability improvement that will convince investors.”
Reporter Park Uimyung [email protected]